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Nationwide Building Society v Thimbleby & Co (1999)

Summary

Whether under the Law Reform (Contributory Negligence) Act 1945, contributory negligence was available in an action for damages for deceit.

Facts

This action involved thirteen separate claims against Thimbleby & Co, a two-partner firm of solicitors, now dissolved, by the plaintiff building society ('the Society'). It was part of the managed litigation reported at Nationwide Building Society v Balmer Radmore & Ors (1999) Times, March 1, 1999 (General principles) and Nationwide Building Society v Balmer Radmore & Ors (1999) Times, March 1, 1999 (Individual actions). The claims in this action arose out of the participation of one partner in a series of mortgage frauds. As a result of admissions made by the innocent partner in the firm, this case was concerned only with one issue, namely whether under the Law Reform (Contributory Negligence) Act 1945, contributory negligence was available in an action for damages for deceit and thus whether the court had power to reduce damages existed under the 1945 Act. It was also admitted that the guilty partner was in deliberate breach of his fiduciary duty to the Society. Contributory negligence was alleged against the Society along the same lines as that alleged in Balmer Radmore (supra) where Blackburne J held that if there had been a deliberate breach of fiduciary duty, the defence of contributory negligence could not be raised. Pending an appeal in that case, the argument here was restricted to the action in deceit. The defence argued that: (i) "Negligence" in the definition of "fault" in s.4 of the 1945 Act meant "lack of reasonable care" not the tort of negligence; (ii) the 1945 Act had extended the scope of the definition of contributory negligence, as the defence of contributory negligence was now available to claims in tort for negligent misstatement; (iii) the courts now recognised contributory negligence as a defence to an intentional tort, namely, in response to an action for damages for violence intentionally inflicted on the plaintiff; (iv) the court had a power under the Civil Liability (Contribution) Act 1978 to order contribution between wrongdoers, which was exercisable on the application of a person even though his liability to the plaintiff was based in fraud. The defence drew an analogy with the situation under the 1945 Act.

Held

(1) It was dangerous to seek to equate judicial usage of particular expressions with the corresponding expressions used in the 1945 Act where the former was not clearly by reference to (and in explanation of) the latter. (2) O'Connor LJ in Forsikringsaktieselskapet Vesta v Butcher & Ors (1989) 2 WLR 290 regarded the first limb of the definition in s.4 of the 1980 Act (whether as applied to the defendant or as applied to the plaintiff) as involving conduct actionable as a tort, contrary to the defence submission in this case. Although this was obiter it was a considered part of the judgment and evidently concurred in by Neill LJ. It would not be right for the court to differ from the Court of Appeal's view of the meaning of negligence when considering the plaintiff's fault. This decision was correctly followed in Alliance & Leicester Building Society & Ors v Edgestop & Ors (1993) 1 WLR 1462, and Corporacion Nacionale del Cobre de Chile v Sogemin Metals Ltd & Ors (1997) 1 WLR 1396. (3) The reason why the 1945 Act applied to contributory negligence, pleaded as a defence to a claim for negligent misstatement, was not because the conduct in question constituted negligence within the first part of s.4 of the 1980 Act but because "it would, apart from this Act, give rise to the defence of contributory negligence". The important words were "apart from this Act" not "before this Act". (4) In the cases cited as examples of contributory negligence as a defence to an intentional tort, the conduct in question which was intentional in nature was actionable as a tort. (5) While there was an obvious analogy between the court's power to apportion damages under the 1945 Act and the power of apportionment under the 1978 Act, the analogy should not be carried too far. Under the 1945 Act, the plaintiff was not guilty of any wrongdoing, merely of carelessness in his own interest. Where the relevant conduct on the part of the defendant had involved fraud, there was no reason why the court should come to his aid to relieve him of any part of the responsibility for the losses which his fraud had caused. There was no equivalence between the fraudulent defendant's position as against his innocent (albeit careless) victim and his position as against a wrongdoing third party (or co-defendant) from whom contribution was sought. (6) Parliament was unlikely to have intended to make so fundamental a change to the law (by allowing a fraudster to plead contributory negligence as a defence to an action in deceit, where previously he could not) without saying so in clear terms. The pre-1945 policy continued to find expression in contemporary authority such as Smith New Court Securities Ltd v Citibank NA (1996) 3 WLR 1051.

Judgment for the plaintiff.For earlier Court of Appeal proceedings on an amendment to the points of claim see Nationwide Building Society v Thimbleby & Co (1998) LTL 15/12/98.

Chancery Division
Blackburn J
Judgment date
1 March 1999
References

[1999] Lloyd’s Rep PN 359